CASE STUDY
Blended finance and partnerships to increase climate-resilient economic growth Aart Mulder, Fund Manager of the Dutch Fund for Climate and Development, FMO
Commercial investment in climate adaptation is limited by the associated low returns and high risk. The Dutch Fund for Climate and Development (DFCD) bridges the developmental stages of well-designed and impactful climate-relevant projects, by absorbing the ‘first losses’, thereby assuring returns and reducing risks for commercial investors. During these stages, the fund’s NGO partners support projects until they become viable commercial investment opportunities. The goal of the DFCD is to promote climate-resilient economic growth, while mitigating the consequences of climate change, with a focus on ecosystems that sustains communities.
AN ARTICLE BY AART MULDER Fund manager of the Dutch Fund for Climate and Development, FMO Aart Mulder is the fund manager of the Dutch Fund for Climate and Development. He works at FMO, the Dutch entrepreneurial development bank, within the Department of Partnerships for Impact. Aart is motivated by finance solutions that combat climate change and reduce poverty, which he believes are the world’s two biggest challenges. www.thedfcd.com
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n recent years, investments by commercial investors in solar panels and wind energy have accelerated – including in developing countries. These involve projects that deal with mitigation: combating climate change by limiting the amount of greenhouse gases emitted into the atmosphere. But commercial investment in
the climate adaptation space is lagging. This is not only because there is not enough money, there are also not enough adaptation projects to finance with private money. The projects that exist have too low a return and are too risky for commercial investors. New blended finance and partnership structures can contribute to closing this gap.
BLENDED FINANCE COLLABORATION BETWEEN A DEVELOPMENT BANK, TWO NGOS, AND A CLIMATE INVESTOR The Dutch Fund for Climate and Development (DFCD) illustrates how innovative blended finance instruments can attract and deploy public and private capital in well-designed and impactful climate-relevant projects. This €160 million climate fund is managed by a
unique consortium consisting of the Dutch development bank, FMO (lead manager), SNV Netherlands Development Organisation, World Wide Fund for Nature (WWF) and Climate Fund Managers (CFM), and is funded by the Dutch Ministry of Foreign Affairs.
Commercial investment in the climate adaptation space is lagging. This is not only because there is not enough money, there are also not enough adaptation projects to finance with private money. 10